Here’s a surprising fact: the number one wealth killer is buying a new car. I strongly believe that most people should avoid buying new cars altogether.
Why You Should Skip the New Car
The main reason is simple: depreciation. As soon as you drive a new car off the lot, its value drops dramatically:
- Immediate loss: 15-20% of the purchase price
- First three years: 40% total value loss (even for reliable brands like Toyota and Honda)
The Smart Alternative
Instead of buying new, consider purchasing a three-year-old car. Here’s why it’s the sweet spot:
- Still feels and looks new
- Often has low mileage (ideally under 30,000 miles)
- Car models rarely change significantly in three years
- Most people won’t notice it’s not brand new
- Saves you significant money
When Might Buying New Make Sense?
The only exception might be if you have:
- Everything else paid off
- Strong, stable cash flow
- Significant surplus in your finances
The Bottom Line
For those still building wealth, a certified pre-owned car or a 3-4 year old vehicle is your best bet. You’ll look good, feel good, and make a smart financial decision in the process.
Note: While leasing might work for some situations, purchasing a used car typically offers the best value for most people.
